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The yin and yang of copyright in China - August 15, 2007

Two stories out of China this week worth pondering in tandem: 1) The U.S. escalated its format trade dispute with China  over Beijing's alleged lax enforcement of intellectual property rights; 2)  A Chinese IT company has filed one of the largest copyright infringement claims in Chinese history against an American videogame developer.

On Monday, the U.S. asked the World Trade Organization to convene a dispute settlement panel to consider Washington's complaint over lax Chinese enforcement. The move came after three months of formal consultations between the countries failed to reach a resolution.

"The United States and China have tried, through formal consultations over the last three months, to resolve differences arising from U.S. concerns about inadequate protection of intellectual property rights in China," a spokesman for the Office of the U.S. Trade Representative said in a statement. "However, we still see important gaps that need to be addressed. We will pursue this legal dispute in the WTO and will continue to work with CHina bilaterally on other important issues."

Chinese vice-premier Wu Yi said the U.S. move would have a "serious impact" on the co-operative framework between the two countries to resolve intellectual property issues and vowed that Beijing would fight the charges to "the very end."

That sounds encouraging.

On the other hand, there really is reason to be encouraged by the second story out of China this week, albeit somewhat counter-intuitively. Chinese IT company Founder Electronics has sued U.S.-based Blizzard Entertainment, a unit of Vivendi, charging the game maker with unauthorized use of its fonts in the online game Worlds of Warcraft. The suit, filed in Beijing Municipal Higher People's Court, asks 100 million yuan ($13.2 million) in damages.

Shanghai-based Founder claims the font database is part of its electronic publishing system used by 90 percent of Chinese newspapers.

The case is part of a growing phenomenon in China, which has seen a huge surge in copyright and other IRP cases since joining the WTO in 2002. Between 2002 and 2006, the annual number of IPR cases grew 48%. In 2006 it grew by more than 50%, according to the Supreme People's Court.

The Copyright Protection Center of China received 23,095 applications for registration of computer software for copyright protection last year, a record, pointing to a growing awareness of the value of copyright protection among Chinese developers.

In the long run (and it could be a very long run) the growing assertiveness of Chinese copyright owners will do more to improve their U.S. counterparts' postion in China than anything the WTO could do.






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